Metropolitan Life Insurance v. Samis

Mitchell, J., delivered the opinion of the Court. The Metropolitan Life Insurance Company, on March 18th, 1935, issued an industrial whole life policy to Etha Samis, providing for the payment of $600, upon receipt of proof of death, to the executor or administrator of the insured, unless under the provisions of the policy the company might, prior to the death of the insured, make any payment or grant any nonforfeiture privilege therein provided to the insured, or any relative by blood or marriage of the insured, or to any person appearing to said company to be equitably entitled to the same. The conditions, privileges, and concessions to policy holders, the schedule referred to as being on the fourth page of the policy, and any indorsement, either printed or written, by the company on' any pages of the policy, were to be construed as a part of the policy in the same manner as if the same had been recited over the signatures of the president and secretary of the company by which the policy was evidenced. The conditions of the policy, in substance, provided, among other things, that the policy constituted the entire agreement between the company and the insured, or the holder and owner thereof; that its terms could not be changed, or its conditions varied, except by the express agreement of the company, evidenced by the signature of its president or secretary; that the company assumed no obligation prior to the date of issue thereof; and that if the insured was not alive, or was not in sound health, on the date of issue thereof, or had within two years before said date been attended by a physician for any serious disease or complaint, or before said date had had any pulmonary disease, chronic bronchitis, cancer, or disease of the heart, liver, or kidneys, unless such medical attention or previous disease was specially recited in the space for indorsements indicated as a waiver by the company, then in such case the company might declare the ⁵²⁰ polity void, whereupon the liability of the company would .thereby become limited to the return of the premium paid on the policy, except in the case of fraud, in which case all premiums would have been forfeited to the company.

An additional condititon of the policy, pertinent to the- issue involved in this case, provided that if the terms of the policy were not satisfactory, or if its conditions were not accepted and! agreed to, the policy might •be surrendered for cancellation -at the office of the manager of the district to which the policy was delivered, within two weeks from date of issue thereof; and if, so surrendered within said period, the premiums paid thereon would be returned. The undisputed facts are that the weekly premiums were regularly paid, and that there were no premiums in arrear at the time of the death of the insured, which occurred on September 17th, 1935; and that the policy was then in fuljl force. Prior to the date -of issue of the policy, on March 8th, 1935, the insured executed an application, upon which the issuance of the policy was based, in which she declared, in order to induce the insurer to issue the policy, and in consideration thereof: (a) That she never had any of a number of complaints or diseases enumerated, among the diseases mentioned being" “cancer or other tumor”; (b) that she was in sound health, and had no physical or mental defect or deformity of any kind; -and (c) that she had not been under the care of any physician within three "years. Following these statements the insured, over her signature, declared^ that they were true and complete, and agreed that any misrepresentation would render the policy void, and that the policy should not be binding upon the. company unless upon its date the insured was alive and in sound health. ' At the time of the application, the uncontradicted evidence in the record is to the effect that the insured was afflicted, and for at least two years had been afflicted, with a fibroid tumor of the uterus, which later developed into a carcinoma and caused her death; and upon the ⁵²¹ refusal of the insurer to pay the loss, this suit was brought by her husband, the administrator of her estate.

The declaration contains but one count, and is based upon the terms of the policy. To it the general issue pleas of “never promised” and “never indebted as alleged” were filed; and later, by leave of the court, these pleas were amended so as to contemplate tender of the premiums paid. At the trial of the case, the plaintiff testified that he was present when the agent of the insurer took the application for the policy, and that the occasion of the agent’s visit to his home was for the purpose of making his regular collection on another outstanding policy of the company, which was in no manner connected with the policy involved in this suit. He then added: “After it was paid he turned and asked her (the insured) why she did not take out a policy.

The answer she gave him was that she had a tumor for two or three years and she did not think she could get a policy. He pulled out a book and looked in it and says, ‘There is nothing in here about it.’ She says, T can’t pass a doctor’s examination.’ He says, ‘There is none.’ Q. You say he pulled a book out of his pocket when he was told that she had had a tumor for two or three years and she didn’t think she could get a policy? A. Yes, sir. Q. What was his reply?

A. Says there is nothing in there about it; make no difference about that; and there was no physical examination whatever. Q. Did she or not tell him anything about having been attended by a physician—Dr. Lynch? A. He asked her when was the last time she had been attended by a doctor. I think she told him three years.

I am not sure about that.” Carrie Lee Dill, a niece of the deceased, who lived with her aunt and said she was present at the time the application was made out by the agent and signed, testified as follows: “Q. In this question, number one, did he or not ask her whether or not she ever suffered from cancer or tumor? A. She told him she had a tumor. Q. What reply, if any, did he make to that? A. Well, ⁵²² when he was trying to sell the policy he said it did not make any difference.

Q. You know whether or not he asked her whether or not she had been attended by a physician during the past two or three years ? A. Yes, sir. Q. What reply did! she make? A. She told him it had not been for a long time; three or four years, maybe more.

Q. Did she tell him the doctor she had consulted? A. Yes, sir, Dr. Lynch.” Dr. Lynch, the physician who attended the deceased for a number of years prior to and during her last illness, testified, on behalf of the defendant, that nine years before her death he made an examination of the insured and found that she was afflicted with a fibroid tumor. He then advised that the patient be operated upon; but this was not done. During the interval following the date of his first examination, the doctor noted distensions of the abdomen, and from time to time advised the operation; and when called to see her a few weeks prior to her death, he found that the tumor had developed into a carcinoma.

He had not, however, attended the deceased within two years prior to her final illness; but he testified that, from his knowledge of her case, gained through his examinations and prior treatment, in his opinion the deceased was not in sound health on March 18th, 1935, the date on which the policy was issued; and that a fibroid tumor^ of the kind the patient had “was a hazard to anybody’s life.” Frank C. Champlin, the agent of the insurer who secured the application, after identifying the original paper signed by the applicant, stated that he filled in the answers to the questions as given by the applicant, and that the paper embodied an accurate account of the answers so given. He further testified! that itl was signed by the applicant in his presence and in the presence of her husband, but denied the presence of Miss Dill. He further denied that the applicant had informed him that she had a tumor, or that he told her, after gaining such knowledge, that it did not make any difference and that she could get the policy if she wished; and disclaimed ⁵²³ any knowledge of the disability of the applicant. He admitted that the securing of the application was incidental to the collection of a premium on another policy, and stated that he wrote all the answers in the application, did not read the same to the applicant, and that she signed it in the presence of her husband, without reading it.

According to this witness, the applicant was sitting six feet away from the agent when he filled in the application, and from the position she occupied she could not have seen the answers he was writing. From a judgment entered on a verdict in favor of the plaintiff for the sum of $636, this appeal is taken. At the trial of the case below the defendant offered four prayers; the court granting the second and third prayers and rejecting the first and fourth. The first prayer, in effect, was a general demurrer to the evidence; and the fourth prayer asked the trial court to instruct the jury that if it believed from the evidence that the insured was not in sound health on the date of issue of the policy sued on, the plaintiff was not entitled to recover in excess of the premiums actually paid on the policy; and the single exception found in the record is to the ruling of the court upon these prayers.

As has been noted, the application of the insured declares that she was not afflicted with “cancer or other tumor,” whereas among the conditions which avoid the policy the affliction of “tumor” as distinct from “cancer” is omitted. In the application the insured declares that she was, at the time of its execution, in sound health; and among the conditions of the policy is that it became void if at the time of issuance the insured was not in sound health. The theory of the plaintiff’s case is that a fraud was practiced upon the insured by the insurer’s agent; and that, under the conflicting testimony in the case, the question of the liability of the insurer was one for the jury. In Great Eastern Casualty Co. v. Schwartz, 143 Md. 452, 457 , 122 A. 647, 649 , it is said: “When facts, as to the materiality of which there may be a legitimate question, ⁵²⁴ are stated by the applicant to the authorized agent of the insurance company, and are disregarded in the application because of his decision that they are not material, thef company is estopped to rely upon such facts to defeat .a recovery.” See Ætna, Life Ins.

Co. v. Millar, 113 Md. 686 , 78 A. 483 ; Dulany v. Fidelity & Cos. Co., 106 Md. 17, 66 . A. 614; Mutual Life Ins. Co. v. Mullan, 107 Md. 457 , 69 A. 385 ; Monahan v. Mutual Life Ins.

Co., 103 Md. 145 , 63 A. 211 , 5 L. R. A. (N. S.) 759; Maryland Casualty Co. v. Gehrmann, 96 Md. 634 , 54 A. 678 . The materiality of a matter affecting an insurance contract, however, regardless of the good faith of the insured, in statements made in the application, in the last analysis resolves itself into the question whether, if the true facts were known to the company at the time of its issuance of the policy, it would have entered into the contract, or as said in Penn Mut. L. Ins.

Co. v. Mechanics’ Savings Bank & Trust Co. (C. C. A.) 72 F. 413, 429 , 38 L. R. A. 33: “A fair test of the materiality of a fact is found, therefore, in the answer to the question whether reasonably careful and intelligent men would have regarded the fact, communicated at the time of effecting the insurance, as substantially increasing the chances of the loss insured against.” In the instant case, whatever may have been, the cir7 eumstances under which the application was issued, and regardless of the fact, if it be true, that an innocent applicant was led to believe that she was insurable, it cannot be gainsaid that at the time of her application she was unfortunately afflicted with a malady which was expressly indicated in her application as one against which the company would not insure. Based upon the advice of her own physiciaA, she had personal knowledge of her affliction ; and whether she-told the agent the truth, and was deceived by h}m, as to this material fact, cannot bind